PUBLIC PRIVATE PARTNERSHIP AND DONOR FINANCING FINANCIAL MODELS, REGULATORY ENVIRONMENT AND FINANCIAL PERFORMANCE OF WATER AND SEWERAGE COMPANIES IN KENYA
Abstract
Water and sewerage companies in Kenya play a vital role in delivering clean water and sanitation services, essential for public health and economic development. However, these companies face significant financial challenges, impacting their ability to deliver quality services. The study focused on two main financing models: public-private partnerships (PPP) and donor financing, and the regulatory environment as a moderating factor. The theoretical framework underpinning the study included the agency theory and public good theory. The study employed a positivistic research paradigm with a correlational research design. The study used financial statements for gathering quantitative data from water service providers in Kenya. Data was analyzed quantitatively through regression analysis. Key findings revealed that the PPP funding model had statistically insignificant effect on financial performance and a negative effect on financial performance when moderated by regulatory framework. Donor financing, however, positively impacted financial performance, demonstrating that donor support is crucial for financially sound water companies. The study highlighted the importance of regulatory framework, showing a strong, positive, and statistically significant relationship between regulation and financial performance. While donor loans and regulatory environment had a positive interaction, the lack of statistical significance suggested that this relationship may not be consistent across different contexts. The study recommended that policymakers enhance regulatory frameworks to maintain market stability and improve the financial performance of water sector entities. Regulations should balance oversight with flexibility to prevent excessive bureaucracy. Collaborative efforts between public, private, and philanthropic sectors were also encouraged to address environmental issues and align public-private partnerships with environmental regulations.
Keywords: Financing Models, Public Private Partnership, Donor Financing, Regulatory Environment, Financial Performance
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